A mortgage loan is a long-term financial product where a borrower agrees to repay a lender, typically a bank or mortgage company, with interest over a set period. The loan is secured by real estate, meaning the property serves as collateral. If the borrower defaults, the lender can seize the property. Terms usually range from 15 to 30 years, with fixed or adjustable interest rates. Common types include conventional loans, government-backed FHA/VA loans, and jumbo loans for high-value properties.

The mortgage loan system is central to U.S. housing markets due to its role in enabling large-scale homeownership. According to the Federal Housing Finance Agency (FHFA), 95% of U.S. home purchases in 2022 involved mortgage financing, reflecting its dominance over cash purchases. This structure aligns with government policies promoting affordable housing, as seen in FHA loans, which accounted for 9.6% of all mortgages in 2023 (U.S. Department of Housing and Urban Development). Data from the Census Bureau further shows that 68% of U.S. homeowners with mortgages have fixed-rate loans, underscoring the preference for stability. Interest rates also influence accessibility; when rates dropped to historic lows in 2022-2023, mortgage originations surged by 30% year-over-year (Mortgage Bankers Association). However, high loan defaults during economic downturns, such as the 2008 crisis, highlight systemic risks. For instance, FHA loan defaults peaked at 12.1% in 2010, prompting stricter underwriting standards. These dynamics illustrate how mortgage loans balance affordability with financial stability, supported by both private institutions and government guarantees.